There's always some type of bickering that goes on between the generations and, these days, it's between Baby Boomers and Millenials. The Baby Boomers claim that Millenials are entitled. Which is pretty funny, because Millenials were raised by Boomers.
On the other hand, Millenials believe that Boomer selfishness helped create a world where it's harder for younger people to get by.
Regardless of who's right in the fight, the truth is that Millennials are on a much shakier financial footing than their parents.
Robert Reich, an admitted Baby Boomer, and former Secretary of Labor in the Clinton Administration, does a great job at explaining the discrepancy in a new video/blogpost entitled "Four Reasons Why Millennials Don't Have Any Money."
"Millennials aren't teenagers anymore," Reich writes. "They're working hard, starting families and trying to build wealth. But as a generation, they're way behind."
They are only half as likely to own a home and more likely to live in poverty than their parents.
Number one: Stagnant wages.
Median wages only grew 0.3% between 2007 and 2017. Just as many millennials were starting their careers, they were thrown into an economy where paychecks stayed the same while living expenses went sky high — especially the prices of education and healthcare. Juxtapose that with the mid-'80s and mid '90s when wage growth was over three times that rate.
Second: As wages have stagnated, the costs of essentials like housing and education have gone through the roof.
The most common way that Americans have built wealth in previous generations was by owning a home. But the exorbitant cost of real estate across the country has priced Millenials out.
The median home price in 1980 was $147,000 in today's dollars and then $178,000 in 2000. As of May 2019, the U.S. median home price is $315,000
Adjusted for inflation, the average cost of a college education in 2018 is nearly three times that of 1978.
Third: As a result of all of this, debt.
Due to the drastic increase in the price of education, Millenials have an average of $28,000 in student loan debt. Add to that, the average young adult carries an average of $5,000 in credit card debt.
Fourth: Millennials are finding it harder than previous generations to save for the future.
That makes total sense given the fact that their expenses are higher and they are saddled with debt. Millennials also aren't saving as much because very few companies offer pension plans like they did for the Baby Boomer generation. Instead, they offer do-it-yourself retirement plans such as 401Ks.
"All of this means that fewer Millennials are entering the middle class than previous generations. Most have less than $1,000 in savings. Many young people today won't be able to retire until 75, if at all," Reich writes.
Reich believes there are steps we can take to improve the financial stability of Millenials and future generations. He says the U.S. can do so by implementing policies such as debt relief, universal healthcare, paid family leave, affordable housing, and a more equitable tax code for renters.
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